Cyclic AMP has a major role as a mediator of many eukaryotic cellular functions. Many aspects of developmental gene expression in Dictyostelium can be mimiced in shaking culture by the addition of exogenous cAMP. In Dictyostelium, extracellular cAMP elicits increases in intracellular cAMP concentrations via activation of an adenylate cyclase. This intracellular accumulation of cAMP in response to an extracellular signal has often been taken as implicit evidence for the regulation of gene expression mediated via intracellular cAMP. However, using a variety of inhibitors of development and mutants exhibiting specific abnormalities in cAMP metabolism, our data suggest an extracellular role for cAMP in regulating the expression of a subset of these genes. The extracellular cAMP function may be mediated by the cell-surface receptor for cAMP. The regulation of other genes, however, may be affected by oscillations in the intracellular cAMP level observed early during development. The possible target of the intracellular cAMP may be a cAMP-dependent protein kinase, both of whose subunits exhibit significant increases in their abundancy during development.